This document provides an overview of how financial services firms can harness social networking to improve business processes and customer engagement. It discusses that social networking is transforming how businesses operate and customers expect constant connectivity. It then outlines five stages for an effective social engagement model: plan, listen, engage, measure, and evaluate/revise. It also discusses regulatory guidelines, building a social business strategy, and how information technology can support social networking initiatives. The key points are that financial firms need to embrace social networking where it makes sense, have a clear strategic plan, and ensure proper governance and tools to measure success.

1. Harnessing Social
Networking In
Financial Services
Whitepaper

2. 2
Why Financial Services Firms Need a Social Networking Strategy 3
Social Media Versus Social Networking 4
The Social Way to Communicate Externally 5
Five Stages of Social Engagement 6
Governance and Information Security 7
Regulatory Guidelines 8
Building a Social Business Strategy 8
Business Process and Information Technology 9
A Pragmatic Action Plan 10
Summary 10
Table of Contents

3. 3
The democratizing forces of web social networking are
transforming the way enterprises worldwide do business.
Online social networking has enabled individuals and
organizations to join communities of interest and share
information widely and easily. The ever-increasing adoption
of mobile oriented consumer technology permits people to
carry powerful, networked devices everywhere. This constant
connectivity is driving the expectation of an always-on, always-
available interaction with organizations. Countless brands
participate on networks such as Twitter, Facebook, LinkedIn
and other specialized web communities, where people have
cometoexpect,ifnotdemand,organizationsmakethemselves
available for multi-directional communications.
At Cisco Systems, 80% of visits to their Facebook Support
Community, with over 6,000 active monthly users, has
eliminated the need for support phone calls. The cost per
interaction with traditional customer support averages $162
per phone conversation versus $0.06 via Facebook.1
At Dell,
25,000 online conversations take place every day through
Facebook and Twitter.2
Dell strengthens brand awareness,
enhances customer relationships, gains valuable feedback,
protects its reputation, and increases sales by fully utilizing
social networking. Both Cisco and Dell integrate social
networking fundamentally into their business processes and
reap the rewards accordingly.
In the financial services industry, social networking is here to
stay and demand to use social technologies byclients, financial
advisors, and business partners is out ahead of most firms’
ability to manage it. 85% of financial services professionals
under 50 years old are utilizing social networking for personal
use.3
More than 40% of financial services professionals under
50 years old say a social networking presence led to cultivating
current business relationships or helped identify new clients.4
A firm’s business ecosystem includes employees, clients,
prospective clients, business partners, suppliers, shareholders,
regulators, and competitors. They comprise the constituents
participating in and reachable through social networking.
Currently available technology can empower your firm to
engage, internally and externally, in ways that traditional
one-way communication cannot support. Successful financial
service firms need to embrace and manage social networking
and let it become part of the firm’s operational fabric. Here
are the most common reasons motivating financial services
firms to build a social strategy:
• Measure sentiment.
• Enhance awareness.
• Increase assets under management.
• Build brand community.
• Protect reputation.
• Facilitate relationship management.
• Improve internal collaboration.
• Assist fund portfolio design.
Social Business Ecosystems are the New Reality
Why Financial Services Firms Need
a Social Networking Strategy
Successful financial services
organizations need to embrace
and manage social networking
where it makes sense to do so.

4. 4
Currently, most businesses use social technologies for
external marketing communication purposes. The term “social
media” is most often linked to brand advertising and online
engagement with parties outside a firm. Public relations and
digital marketing agencies have played a large role helping
many companies, across industries, with their external social
engagement messaging to date.
“Social networking” has a broader meaning which includes
and extends social media concepts to all internal and
external communications and processes utilizing social
technology platforms. These software platforms enable
virtual communities of interest to form around a topic, brand,
or organization. In a purely internal example, social networking
technology can permit virtual teams that include product
development, marketing, sales, and relationship management
to collaborate more effectively than using e-mail, conference
calls, and face-to-face meetings alone. Enhanced internal
processes in turn deliver differentiated value back to business
partners and clients. Utilizing social networking in this broader
context is outside the core competence of public relations and
digital media agencies and requires a more holistic business
process and technology skill set.
The paradigm of an always on, streaming flow of tailored
information targeted to a community of interest made so
popular by Facebook, LinkedIn, and Twitter, is being demanded
by the employees of many organizations for internal use as
well. A complete social networking strategy must anticipate
the broad implications of how financial services firms will
communicate, both internally and externally, in the years ahead.
Social Media Versus Social Networking
Listening and Engagement
Vibrant Internal and External Communities
Social Innovation
User-influenced products
and feedback, identify
product enhancements
and new requirements
Brand awareness, stimulate
interest, measure sentiment,
protect reputation, gain client
feedback, collaborate with
internal colleagues
Keep track of financial
advisors’ career changes,
understand client issues and
sentiment, identify new
clients, shorten sales cycles
Active outreach, resolve
issue quickly, improve
efficiency, eliminate support
phone calls, reduce costs
Collaborate with business
partners, share thought
leadership, build trust
Product Development Marketing
Relationship
Management
Sales Customer Service
Figure 1. Broad impact of social networking across the organization.
H H H H H

5. 5
The focus of many current social networking initiatives in the financial
services industry is the use of social networking to help drive marketing
and sales. While the impact of social networking will be profound inside
organizations as well, the focus here is on financial services firms’
interaction with the outside world.
There has been a fundamental shift in the tools and techniques used.
The Social Way to Communicate Externally
Social Strategy Tips:
• Have a Plan.
• Start Small. A successful plan
will take on a life of its own.
• Be innovative. Get to know your
community and find out what
will inspire and motivate them
to participate.
• Understand your employees and
how they will respond to new ways
of conducting business.
• Tie the campaign into direct
marketing and place information,
invites to participate, and links in
email, newsletters.
OLD WAY NEW WAY
Telemarketing
Trade Shows
Direct Mail
TV, Newspaper
and, Radio Ads
Search Engine Optimization (SEO),
Adwords, Social Engagement Applications
Blogs, Webinars, Tweets, Virtual Conferences
Facebook, LinkedIn, Twitter
YouTube, Google, and Facebook Ads
As target audiences increasingly spend time on social networking platforms
such as Facebook, LinkedIn, and Twitter, it becomes imperative for
financial services firms to effectively engage with them there. The power
of participating comes from the ability to communicate with large target
groups very efficiently.
Figure 2. Old marketing techniques replaced by new.
R
R
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6. 6
Fully harnessing social networking initiatives requires clear
goals and measureable objectives to evaluate success. There
are five steps to an effective social engagement model:
• Plan
• Listen
• Engage
• Measure
• Evaluate and Revise
Plan
A well conceived plan with executive commitment, clear goals,
measurable objectives and appropriate resources is necessary
for success of a social marketing program. Having answers to
the following lays the proper foundation:
• What are the social initiatives’ goals and objectives?
• What are the risks and rewards?
• What will stimulate the desired target audience
engagement?
• Are government regulation and corporate governance
considerations well understood?
• Are all stakeholders appropriately involved?
(Distribution, Marketing, Legal, Compliance, IT, HR )
• What marketing and technical personnel skills
are needed?
• What new technology needs to be implemented?
• Who in the organization will lead the initiative?
• How will success be measured?
• How much will it cost?
• What comes next?
Listen
Knowing what is being said about your firm and the
competition is an important early step. Finding out which social
networking platforms your online target audiences congregate
and collecting a thorough understanding of the dialog takes
technology and know-how. The quantity of both structured
(i.e. opinion surveys) and unstructured (i.e. tweets) data can
quickly grow so large, sophisticated software tools are needed
to identify trends and determine relevance. Numerous software
products are now on the market and the pace of leapfrog
advancement is rapid. A recent report, “Your Brand: At Risk
or Ready for Growth,” found that 75% of those surveyed said
it would have a positive impact on their experience as a client
if a firm took the time to find out more about their needs.5
Listening in effectively to the dialog taking place on the social
networking platforms can enhance and potentially replace the
need for traditional opinions surveys.
Engage
Where and how does the firm participate in the social dialog?
What should be said that creates brand awareness, stimulates
interest and drives commitment? How is the firm’s reputation
protected and enhanced? What human capital resources are
required to handle the task? The social web is based on human
interaction and the target audiences you engage. If done well,
utilizing social networking will help your constituents develop
a closer affiliation with your firm over time. In most cases,
the best people to interact with your constituents are subject
matter knowledgeable and from your own staff. A successful
external social networking initiative should create something
of sufficient interest that the word spreads, more people join
the dialog, and the firm’s brand image is enhanced.
Five Stages of Social Engagement

7. 7
Innovative technology plays an important role in managing how
your firm engages in the social web. Software can now assist
and control issues such as:
• Who within the firm is allowed to do what with
social engagement?
• How will all interactions be captured and cataloged
for audit, monitoring, and regulatory purposes?
• How can communications be produced once and
efficiently distributed to many social networking
platforms simultaneously?
• How can inbound traffic from multiple social
networking platforms be aggregated and
managed efficiently?
Measure
Social data must be treated as any other corporate data asset
andthereforemustbeintegratedintoanorganization’sreporting
and analytics strategy. Management considerations are:
• Selecting and implementing, monitoring, and analytic
tools to measure social initiatives effectiveness.
• Developing analytic and reporting requirements.
• Creating discovery and analytic rules from which
critical business information can be obtained.
• Designing and developing social reports and
dashboards consistent with the firm’s overall
reporting strategy.
Again, software tools play a key role in making sense of an
external social networking initiative and give firm management
the information needed to make intelligent decisions. Every
initiative requires metrics and reporting in order to determine
the extent to which it has met the business objectives. Social
networking monitoring tools aggregate conversations from all
social channels in one place making it possible to create high
level management reports. The sophistication of these tools is
improving rapidly and evolving from simplistic key word search
results to a deep understanding of social dialog relevance.
Evaluate and Revise
Reviewing the success of an initiative is essential for planning
future ones. Questions to consider are:
• What worked and what could have been
executed better?
• Did the initiative meet the business objectives set
at the outset?
• Was the effort worth the investment?
An effective social engagement strategy requires a firm be
committed for the long haul, continually learning, revising,
improving, and investing appropriate resources.
Governance and Information Security
Strong corporate governance and information security helps
the organization establish the accountability necessary to align
behavior with corporate goals. It is important to understand
the implications social networking has on the organization
and the governance required to adopted it responsibly.
Implementing the software tools and business processes
necessary to ensure control and manageability is vital. A firm’s
social networking engagement must be according to corporate
governance policy, information security standards, industry
guidelines, and government regulations. Before proceeding
past the planning stage, ensure the firm has the governance
and security infrastructure in place to satisfy the requirements
of the business.

8. 8
Financial Industry Regulatory Authority (FINRA) Regulatory
Notice 10-06 issued in January 2010 provides guidance on the
use of blogs and public social networking sites. FINRA 10-06,
in conjunction with SEC and NYSE rules, gives clarity to how
financial services firms must operate in the web social world.
According to FINRA:
• Postings on publicly available social networking
web sites are considered advertisements.
• E-mail or instant messages sent to 25 or more
prospective customers are considered sales literature.
• E-mail or instant messages are considered
correspondence if sent to a single customer, an
unlimited number of existing retail customers,
and/or less than 25 prospective retail customers
within a 30-day period.
• Postings on password-protected social web sites
are considered sales literature.
• Chat room discussions are considered public
appearances.
Software products are now generally available to address the
authorization, reporting, approval, auditing, and regulatory
requirementsofFINRA10-06andtheotherSECandNYSErules.
Depending on the policy your firm defines, adopt a solution
that automatically routes social networking messages to a
registered principal to accelerate the review process while
providing a complete audit trail. Adopt a solution that
enables configuration of supervisory rules based on the FINRA
guidelines as well as your firm’s own unique procedures and
policies. Ensure the solution enables the firm to capture
and retain all social networking activity, with the associated
description about the content, and archive it in a structured
fashion enabling easy retrieval. Be able to selectively disable
social network platform functionality by role, user, and location.
Tight control will protect the firm from harm and allow the
social networking investment’s impact to be well understood
by the firm’s management. Your compliance solution should
give real-time usage insights down to the individual level,
clarity of rule violations, and indications on the effectiveness
of employee social networking training.
Building a Social Business Strategy
A social business strategy involves a systematic approach
to ensure success. Social strategy needs to be designed and
not just implemented. An organization’s success is based on
the involvement of all critical stakeholders and must start
with education. As with anything new to an organization, the
possible must be explored but accomplishments are achieved
only by getting stakeholders on the same page about those
possibilities. Successful strategy eliminates ambiguity through
alignment and adaptation. In the case of harnessing social
networking, this can be a real challenge since new innovation is
being introduced to the market almost every day. Don’t hesitate
to evaluate your competition and the market in general. Engage
in social networking to learn and help create your strategy.
Social business strategy involves 4 critical steps:
1. Prepare: align the organization on what is possible.
2. Visualize: evaluate current state, identify
opportunities, and document the plan.
3. Implement: build the solution and complete
the deployment.
4. Manage: use metrics to determine progress
and adjust to improve.
Regulatory Guidelines

9. 9
Educate
Connect the organization
to social trends and
opportunities.
Analysis
Assess current state and
organizational readiness.
Plan
Define the business model,
approach, and budget.
Design
Design project approach and
select technology options.
Build
Solution implementation
and integration.
Sustain
Broaden scope of project,
on-going operation, and
monitoring.
PREPARE VISUALIZE IMPLEMENT MANAGE
Figure 3. A staged social business strategy.
It takes highly skilled business innovation, information
technology, sales and marketing professionals to build a first
class social networking strategy. Below is a series of best
practices steps:
• Define social networking goals, objectives, and return
on investment criteria.
• Create an overall social business innovation approach
and architecture blending business objectives with
appropriate technical solutions.
• Link your organization to the social web communities
where the various target constituents congregate.
• Integrate internal sources such as customer service
databases and collaboration tools into the social
business ecosystem.
• Implement software tools and processes that ensure
control and manageability according to corporate
governance, information security policy, and
government regulation.
• Select and implement software tools to listen,
understand, and engage in relevant internal and
external social dialogs.
• Select and implement monitoring and analytic tools
to measure social initiatives effectiveness.
• Integrate with existing customer relationship
management systems.
• Ensure organizational readiness to fully harness
social networking.
• Continually review and enhance the technology and
business processes to ensure maximum effectiveness.
• Stay current with the social technology changes and
keep the organization informed of those offerings
that have relevance.
Business Process Innovation
and Information Technology

10. 10
1. Ensure that your organization wants to adopt social.
As with the introduction of any new technology, the
smart organization starts small. In the case of social
technologies, there is no guarantee that your organization
will embrace them. Carefully define the business issue
you want to address and work closely with business
leaders in a controlled pilot to ensure that your firm will
embrace social technologies. Do not underestimate the
change management efforts to drive adoption. Change
management should certainly include access to training
materials, but far more important is that users have a
strong understanding of the business goals and objectives
regarding the initiative.
2. Define success, avoid risk. Build on the pilot success.
Expand the use of social technologies to include more
users and more business use cases. Look for business
cases that reflect the lessons learned earlier and
engage appropriate business leaders to support the
broad initiatives. Particularly in financial services firms,
determine policy and governance to guide the emerging
social environment. Many firms have balked at wide-
scale use of social technologies because of challenges
related to security, privacy and compliance. These issues
are generally manageable, and a well-governed social
environment will lower risk because of transparency.
Involve all stakeholders; marketing, sales, relationship
management, product development, customer service,
human resources, legal, and network security professionals
to build policy and governance models.
3. Treatsociallikeatrueenterpriseasset. Asyourfirmmoves
social technologies into enterprise-wide deployment,
be prepared to harden the implementation. A social
business ecosystem should be capable of existing in a
mission-critical environment. Operationally, your social
applications should be highly available, integrated with
corporate authentication systems, and deployed widely to
drive critical mass of adoption. Integration with adjacent
technologies, like line-of-business systems, should be
part of your long-term strategy­and technology selection
shouldsupportthosegoals.Organizationscurrentlymoving
toward broad deployment are in the process of building out
strategieswithcoreline-of-businesssystemslikecustomer
relationship management (CRM).
Summary
Social networking combined with powerful, mobile, personal
communications devices is the most impactful information
technology trend of our time. It requires a new way of
thinking and a fresh look at your firm’s business process from
the outside in. While care needs to be taken to adopt social
networking prudently, not moving assertively forward carries
far more risk to the long-term viability of your firm. The use
of social networking globally is now so widespread, there is
simply no better new way for financial services firms to reach
targeted audiences efficiently. First movers have a competitive
advantage because they build experience and brand loyalty that
will be challenging for others to overcome.
Fully harnessing social networking requires expertise your firm
many not have internally. The pace of change is so rapid that it
is difficult for non-dedicated professionals to keep up. Along
with stakeholder representatives from across the firm, get
help early on from trusted outside sources that are experts
in the field and technology vendor agnostic. Taking the steps
described in this document will position your firm for social
networking success in the short and long term.
A Pragmatic Action Plan

11. 11
Sources:
1
Cisco internal source. 2011.
2
Dell internal source. 2011.
3
85% of financial services professionals under 50 are utilizing social networking for personal use. (Ledermark, 2010).
4
More than 40% of advisors under 50 said a social networking presence led to cultivating current business relationships or
helped identify new clients. (Ledermark, 2010).
5
Your Brand: At Risk or Ready for Growth (Alterian, 2011).
SoclWorx, LLC is an independent business process
innovation and information technology professional
services firm dedicated to helping organizations fully
harness the value of social networking.
We make Social Work.
CONTACT US:
SoclWorx, LLC
240 New York Drive, Suite 6
Fort Washington, PA 19034
Phone: 610-783-5350
E-mail: info@soclworx.com